Group 1 - The company achieved a profit turnaround in Q2, with revenue of 1.747 billion yuan (+4.50%) and a net profit of 22 million yuan [1] - For the first half of 2025, the company reported revenue of 3.009 billion yuan (+11.16%) and a narrowed net loss of 228 million yuan, a 61.54% improvement [1] - The gross margin increased to 62.09%, up 0.75 percentage points year-on-year, with significant improvements in the cloud computing business [1] Group 2 - Cloud computing remains the main driver of revenue growth, with a 26.15% increase in revenue to 1.395 billion yuan in the first half of 2025 [1] - The government business is recovering, with a 16.98% revenue growth, accounting for 41.57% of total revenue [1] - The company has a strong international market presence, achieving revenue of 254 million yuan (+35.33%) [1] Group 3 - The security industry is stabilizing, with expectations for gradual profitability in 2025 as the company integrates AI with security services [2] - The company maintains a leading position in hyper-converged infrastructure (HCI) with a 25.1% market share, and the "One Cloud" strategy is continuously upgrading [2] - The distributed storage business is showing rapid revenue growth, enhancing the company's competitive edge [2]

Investment Rating - The investment rating for the company is "Outperform the Market" [4][12][18] Core Views - The company achieved profitability in Q2, with a revenue of 1.747 billion yuan, representing a 4.50% increase, and a net profit of 22 million yuan, marking a significant recovery [1][7] - The cloud computing business remains the main driver of revenue growth, with a 26.15% increase in revenue to 1.395 billion yuan in H1 2025 [1][2] - The company is expected to release a profit turning point in 2025, driven by AI and security integration, with a focus on XDR and managed security services [2][12] Financial Performance Summary - For H1 2025, the company reported a total revenue of 3.009 billion yuan, an increase of 11.16%, and a narrowed net loss of 228 million yuan [1][7] - The gross margin for H1 2025 was 62.09%, up by 0.75 percentage points year-on-year, with a notable increase in the gross margin of the cloud computing business by 3.46 percentage points [1][2] - The company expects revenues of 8.321 billion yuan, 9.346 billion yuan, and 10.740 billion yuan for 2025, 2026, and 2027 respectively, with growth rates of 10.7%, 12.3%, and 14.9% [2][12][16] Revenue Breakdown - In H1 2025, cloud computing revenue was 1.395 billion yuan, while security business revenue was 1.435 billion yuan, and basic network and IoT revenue was 179 million yuan [1][2] - The revenue from enterprise customers grew by 6.61%, accounting for 48.75% of total revenue, while government and institutional revenue increased by 16.98%, making up 41.57% [1][2] - International market revenue reached 254 million yuan, reflecting a growth of 35.33% [1][2]

Investment Rating - The report maintains a "Recommended" investment rating for the company, indicating an expectation of stock performance that exceeds market performance by 10% to 20% over the next six months [1][14]. Core Insights - The company's revenue growth is driven by cloud computing, with a reported revenue of 3.009 billion yuan in the first half of 2025, reflecting an 11.16% year-over-year increase. The net profit attributable to shareholders was -228 million yuan, with losses narrowing by 61.54% year-over-year [5][9]. - The company achieved profitability in the second quarter of 2025, with a net profit of 21.98 million yuan, compared to a loss of 103 million yuan in the same quarter of the previous year [9][10]. - The company is focusing on upgrading its product and service capabilities towards AI, particularly in network security and cloud computing, which is expected to enhance its market position [10]. Revenue Breakdown - In the first half of 2025, the company generated 1.395 billion yuan from cloud computing and IT infrastructure, a 26.15% increase year-over-year, accounting for 46.36% of total revenue [9]. - The network security business generated 1.435 billion yuan, showing a modest growth of 2.61%, while the basic network and IoT business saw a decline of 11.62% to 179 million yuan [9]. Financial Projections - The company forecasts net profits of 409 million yuan, 529 million yuan, and 696 million yuan for 2025, 2026, and 2027, respectively, with corresponding EPS of 0.97 yuan, 1.25 yuan, and 1.65 yuan [10][12]. - The projected P/E ratios for 2025, 2026, and 2027 are 107.4, 83.0, and 63.1, respectively, indicating a potential for improved valuation as earnings grow [12]. Market Position - The company is recognized as a leading ICT provider in China, particularly in the network security sector, and is expected to maintain its competitive edge through continuous innovation and market adaptation [10][12].